Chicago Gold Coast Talbott Hotel Sold to Canadian Investor
The deal at over $ 300,000 per room is a relatively strong valuation data point for downtown hotel owners struggling with the pandemic’s harsh and lingering impact on businesses. It also reports what hotel experts say is an impressive comeback for sellers amid the public health crisis, even though they suffered a significant loss on the sale.
A joint venture led by Sterling Bay and partners Geolo Capital and Wanxiang America Real Estate Group purchased the hotel in October 2015 for $ 51 million as part of a deal that included celebrity investors John Cusack and Chris Chelios, among others . The group then spent $ 16.4 million renovating all of the rooms, including 29, as well as the lobby, restaurants, fitness center and other spaces, according to a leaflet from Jones Lang LaSalle, which has negotiated the deal.
With that total investment of more than $ 67 million, the Sterling Bay-run company refinanced the property in 2019 with a loan of $ 45.9 million, according to Cook County real estate records.
Some hoteliers have said there is no guarantee that owners will find a buyer above debt levels, given the pandemic’s assault on hotel occupancy and centrally located room rates. city. Now, FullG Capital has taken over the leisure travel ownership after a promising summer of tourism in the city, but with little clarity on when or if business travel will return and what that will mean for the rates that hotels in the downtown will be able to charge over the next few years.
Revenue per available room at downtown hotels that opened in August, a key performance metric that takes into account both room rate and occupancy, averaged 105.22 $, according to hotel data and analytics firm STR. This was almost twice the average three months earlier and eclipsed the August 2020 average of $ 30, but was still well below the nearly $ 175 average in August 2019, according to STR data.
A spokesperson for FullG Capital could not be reached and a spokesperson for Sterling Bay did not comment.
FullG Capital also owns a pair of hotels in the Atlanta area and manages $ 165 million in assets, according to its website.
The company isn’t the only investor betting on the return of a downtown Chicago hotel. His deal comes two months after Chicago-based Oxford Capital Group paid more than $ 72 million – just under $ 300,000 per room – for the 247-room Thompson Chicago hotel at 21 E. Bellevue Place, just two blocks north of Talbott. This sale, one of the most expensive hotel trades in the city center since the start of the pandemic, and the sale price of the Talbott are reassuring signs for the owners of certain types of hotels well located in the city who do not not very dependent on bookings and events of large groups.
“It certainly reflects the optimistic outlook for Chicago’s recovery and the fact that while things are not going well right now, even buyers believe Chicago will come back fully,” said consulting firm assessor Stacey Nadolny. hotelier HVS.
Best known for redeveloping and owning premier Chicago office buildings, Sterling Bay made one of its first pieces in the hotel space with the Talbott. But it was a relatively bumpy property regime even before COVID arrived. Hyatt Hotels announced in 2018 the acquisition of Talbott’s management company Two Roads Hospitality, bringing together the Joie de Vivre boutique hotel brand of Two Roads under the Hyatt umbrella. The Talbots then again changed management companies to the Pivot Hotels & Resorts brand of Atlanta-based Davidson Hospitality. Such rapid changes can impact the staffing and room pricing strategy at hotels, making it difficult for them to gain long-term traction from guests and customers.
JLL hotel brokers Adam McGaughy and John Nugent market the Talbott on behalf of the owners of the joint venture.